Air France-KLM CEO Will Resign After Workers Reject New Pay Proposal

Ania Nussbaum, Bloomberg

- May 04, 2018 1:52 pm

Skift Take

Air France is lucky it’s tied to its Dutch sibling, KLM. Without it, Air France would probably be a lot more like Alitalia — teetering on the edge of insolvency because its employees don’t want to change with the times. It’s hard to believe the next CEO of Air France-KLM would have better luck.

— Brian Sumers

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Air France-KLM Group was thrown into disarray on Friday after Chief Executive Officer Jean-Marc Janaillac said he would resign following the rejection by workers of a wage offer aimed at ending a series of crippling strikes.

The CEO “will convene meetings with the Air France-KLM and Air France boards of directors on 9 May and will submit his resignation,” the company said in a statement. About 55 percent of staff who voted rejected the proposal in an online poll. The airline has faced 13 days of labor action by pilots, cabin crew and ground staff since Feb. 22.

A “no” vote amounts to pressing “the self destruction button,” RBC analysts wrote in a note before the results were known.

While the outcome isn’t legally binding, it will put boost the negotiating position of unions at the French arm of Air France-KLM Group. A majority of labor representatives have to approve any wage deal for it to take effect. Management offered a 7 percent increase over four years, while unions were pushing for a 5.1 percent rise this year.

Rotating two-day walkouts at Europe’s biggest airline have taken their toll, with the carrier warning Friday that full-year results are expected to be “notably below” 2017. The strikes will wipe out at least 300 million euros ($358 million) in operating profit while the carrier’s fuel bill will be 350 million euros higher and the stronger euros will also have a negative impact. Shares dropped the most in six months.

“A bad proposal remains a bad proposal,” Beltran Ybarra, a representative of the main pilots’ union said by phone before the end of voting.

Air France has a history of labor strife, with previous chief Alexandre de Juniac toppled amid strikes and violent clashes as workers sought to repel plans for a new low-cost operation based outside France. Janaillac had avoided conflict by focusing efforts on the new Joon unit staffed by lower-paid cabin crew, before eventually having to confront pay issues at the main airline.